Rob Perez recently joined JLL as Managing Director of Healthcare Solutions in the West Region. In this role, Perez will lead regional healthcare development activities, helping hospitals and health systems enhance the patient experience, improve clinical outcomes and drive financial performance through real estate and facilities solutions.

Based in Los Angeles, Perez brings more than three decades of experience in healthcare business development, public and private accounting and sales. Connect Media asked him to share insights about what’s driving the healthcare CRE sector.

Q: What factors are impacting growth of the healthcare real estate industry on the West Coast?

A: There is an ongoing shift from traditional inpatient care to the ambulatory/outpatient setting, which is more favorable in terms of cost per square foot. Identifying and locating properties that are suited to the medical industry could be more difficult and/or expensive to secure. As an example, the San Diego market is experiencing a decreasing supply of suitable ambulatory/outpatient sites, and is land locked.

Additional factors on healthcare real estate will be the ongoing consolidation of major health systems. There is uncertainty if these new, larger organizations will look to dispose of some assets, or if they plan to continue to grow in markets where they have strongholds, which would require securing additional real estate assets.

A: Cost to acquire assets is always a concern by the C-suite, especially with the strong growth in medical real estate valuations that have been experienced over the past few years. Available supply in the markets served is also on their radar screen, especially if growth in a specific area is in their planning. There will be scrutiny on capital budgeting in years to come as it relates to acquiring real estate assets. Monetization of current assets may be more prevalent, freeing up significant amounts of capital.

Q: What changes to healthcare real estate will we be talking about 12 months from now?

A: With insurance reform uncertainty, many hospitals and health systems may take a wait and see attitude as it relates to significant capital expenditures, including real estate. They will continue to focus on reducing the cost per square foot of maintaining their facilities, which lead them to explore innovative programs, including full Facilities Management. This measure will enhance patient safety standards, improve clinical outcomes and patient experience, while driving financial performance through real estate and facility solutions. Mergers and acquisitions will also continue to be in play, with increased activity following more clarity around the status of the Affordable Care Act.